Solar power payback is the time it takes for the savings from using solar energy to pay for the original system. Determining this period requires comparing the price of grid drawn electricity per kilowatt-hour (kWh) to the cost of solar electricity per kWh. There are many factors affecting payback period, and each system’s set of factors are unique. Here are a few:
- system type generally, the bigger the system, the lower the cost per kWh
- cost of financing interest on loans
- location an area with more solar radiation will provide more electricity, and thus will have a faster solar energy payback time
Even though producing solar power is more expensive than drawing from the grid, the above factors can be altered to lower the cost per kWh through:
- subsidies or rebates on PV systems from utilities or government energy agencies
- preferable financing from banks, such as low interest loans specifically for PV systems
- tax incentives such as sales tax exemption on PV systems, state personal income tax credits or property tax exemptions
Photo Credit: Solarbuzz
Not everyone pays the same price for solar. The people who get the best deals have done their homework and know the right questions to ask. Read SolarTribune’s step-by-step guide to getting the best possible deal on solar.
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